Large Latin companies are in increasingly good shape to make international acquisitions but, rather than scouting in their backyard, blue chips are primarily pushing to become truly international with takeovers in developed markets, outside the region. Medium and smaller companies are typically more interested in shopping close to home, but the financing picture has worsened due to weak credit markets and nervy investors seeking liquid deals, damping activity in this segment. Although private equity companies are likely to step into the breach, big, mostly global acquisitions will trump mid-sized, regional ones, for now, say bankers.
Brazilian steelmaker Gerdau, which at the ripe old age of 106 is experiencing something of an adolescent growth spurt, made a splash with two significant acquisitions in 2007. The two big companies that it acquired, Chaparral ($4.22bn) and Quanex ($1.6bn), are both based in the US. Arch-rival Brazilian Votorantim also made two US acquisitions, snapping up the zinc operations of Aleris ($295m) and Prestige Group of Companies ($200m). In Mexico, Cemex took over Australian Rinker for more than $15bn, further expanding its international (and developed market) footprint.
